Kerala Stares at Rs 5,000 Cr Annual Loss as SC Shuts Liquor Shops

The ban will lead to 50,000 job losses in the state.

Kerala will seek a three month extension to implement the Supreme Court order banning the sale of liquor on highways, state finance minister Thomas Isaac told BloombergQuint. The southern state stands to lose Rs 4,000-5,000 crore a year in excise and sales tax revenue if the order is implemented, added Isaac, who had factored in excise and sales tax collection of Rs 9,000 crore from liquor sale in the state’s Budget for financial year 2017-18.

The Supreme Court on Friday, ordered a ban on the sale of alcohol in restaurants, hotels and liquor outlets within 500 metres from national and state highways. In a slight modification of its 15 December 2016 order, the court said the ban will be within 220 metres of the highway in towns with population below 20,000.

Also Read: Highway Liquor Ban: 1 Million Jobs, Rs 200 Thousand Cr at Stake

About 1,956 liquor bars were shut down in Kerala, one of the highest liquor consuming states, after the Supreme Court’s directive, wire agency PTI reported on Sunday.

“It is difficult to relocate all liquor shops as it’s (Kerala) a small state… It will be difficult to find the location which would meet requirements of Supreme Court,” said Isaac.

The ban would lead to 50,000 job losses in the state as hotels as well as liquor shops start reducing their staff, he added.

Also Read: ‘Hotel Industry Will Lose Half of Annual Revenue After Liquor Ban’

Tourists May Head Elsewhere

The court’s directive will also be a “major blow” to the state’s tourism industry as most luxury hotels, which cannot be relocated, are along the highways, said Issac. He expects tourists to now opt for other travel destinations, especially Sri Lanka, which currently gives the state tough competition.

Total revenue from the tourism industry in Kerala in 2016 was Rs 29,658.56 crore, according to data on the Kerala tourism website. This includes both domestic and foreign tourists, and contributes around 10 percent of the state’s total revenue, according to Isaac.

Also Read: Pub Alert: Liquor Bars Along Highways In South Shut Shop After Ban

The Indian tourism minister Mahesh Sharma, who met representatives from the hotel industry on Monday has also said that the government is seeking legal opinion to find a ‘middle path’ to solve the problem.

Amitabh Kant, chief executive officer of Niti Aayog said in a tweet on Sunday that the tourism industry, one of the largest job creators in India, will lose around 1 million jobs after the apex court's verdict.

Also Read: In the Politics Against Liquor in Kerala, Ganja Is the Winner

(This story was originally published in BloombergQuint.)

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